As Australia contemplates raising the goods and services tax, the Japanese ambassador has reflected on the impact of his own country's consumption tax increase.
Federal, state and territory leaders last week agreed to keep on the table a NSW proposal to increase the GST to 15 per cent from 10 per cent to help cover future health funding.
Ambassador Sumio Kusaka told reporters at the National Press Club in Canberra on Tuesday that raising a consumption tax is a "difficult political matter".
Japan has learnt this lesson the hard way.
For the first time in 17 years, Japan in April last year raised its consumption tax from five to eight per cent which contributed to the economy slipping into recession in the third quarter.
Prime Minister Shinzo Abe called a snap election in December and cruised to victory after promising to postpone a further tax hike to 10 per cent until 2017.
Mr Kusaka said Japanese leaders were more cautious ahead of the next rise.
"Australia is operating under different circumstances," he said, but declined to offer the Abbott government any specific advice.
The International Monetary Fund has warned Japanese government debt could be almost triple the size of its economy in 15 years unless there were spending cuts.
Japan's debt to gross domestic product ratio sits just under 230 per cent compared to Australia's that is predicted to be 25 per cent in 2015/16.
Mr Kusaka insists Japan's economy is on a path to recovery as a result of "Abenomics" a three-pronged economic strategy involving aggressive monetary policy, flexible fiscal policy and structural reforms.
The aim is to bring to an end long-lasting deflation.
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